How to renew your car insurance policy

by Micaela Allen
May 26th, 2016

Depending on your insurance company, you have a few options when it’s time to renew your auto insurance. Learn about policy period, rate changes, and what renewal denials mean for you.

Car insurance isn’t something you can purchase last minute. Not only is it illegal to drive without a policy throughout the U.S., a gap in your coverage will lead to serious penalties down the road that will cost you hundreds, if not thousands, of dollars.

While some days it may seem like car insurance is only around to take your hard earned money, you won’t feel the same way when you get into an accident and find yourself -- and your bills -- covered.

So make sure you’re on top of your policy renewals.

What is a car insurance policy renewal?

A car insurance policy renewal is required before the end of your policy period.

A policy period is the standard length of time an insurance policy is in effect, usually six or twelve months, in which your auto insurance carrier can’t adjust your rates.

Of course, your rates can be adjusted if you make a change in your coverage during that period.

A renewal date coincides with the date your policy went into effect and, of course, the length of your policy.

Whether you have a six or twelve month policy, your insurance carrier should mail or email you renewal information a month or more before your current policy expires.

This information usually includes a declaration page and new proof of insurance. When you receive this renewal information, it’s a perfect time to verify discounts and make changes in your coverage.

It’s also the appropriate time to cancel your policy if you don’t plan on driving anymore or you’re switching carriers. Contact your agent either way to make sure everything is up to date.

How to renew your car insurance policy

Call Your Agent: If you’re not sure how to go about renewing your policy when the time comes, call your insurance agent or your carrier’s main information number.

They’ll be able to answer any questions you have about renewal and changes in coverage. They’ll also be able to tell you if you’re already signed up for automatic renewal and just weren’t aware of it.

Go Online: Many insurance companies now conduct the majority of their business online, so it makes sense to check for your renewal status on their website.

If you have an online account with your company, you should first check the FAQ section for information about policy renewal.

If you’re a current customer, you may even be able to renew your policy online in a few simply steps. They’ll most likely ask you to verify your personal information and include any changes in your coverage. The whole process should only take a few minutes.

Automatic Renewal: If you want a completely hassle free policy renewal experience every six to twelve months, it’d be best to sign up for automatic renewal with your current insurance carrier.

Policy renewal is made easy because the insurance company wants to keep your business. It could require anything from a quick phone call to your agent to an online form.

However you decide to renew your policy, it’s extremely important to get your first payment in on time because most insurance companies don’t offer a grace period for the month of your renewal.

Timely payment not only indicates to your insurer that you do want to continue your policy, but it also will prevent you from having a lapse in your car insurance coverage, which impacts your driving record.

Why did my car insurance rates change after my policy renewal?

When you first look over your renewed policy, you may notice a change in your premium rates, whether good or bad. This can happen for a number of reasons.

Feel free to call your agent with any questions, but keep in mind that a lot can change in six to twelve months that can affect your rates, including:

Overall insurance rate increase: Just like the cost of living, the price of insurance can increase over time.

Insurance rates are controlled by state governments and the amount of claim activity within a given time period.

Therefore, the rate increase you see on your renewed policy might be seen across the board for all drivers under that carrier.

Coverage Changes: Premium rates heavily depend on each individual driver’s lifestyle. However, circumstances like adding or removing drivers and vehicles from your policy, changing your deductible or annual mileage, and moving can all impact your rates.

For example, someone’s rates would increase if they got a new job further from home that made their commute longer. Or maybe they bought a new car that requires more coverage than their old station wagon did.

Driving Record: Insurance companies are largely concerned about risk, and there’s no bigger risk for an insurance company than a driver with a poor record.

You’re driving record is a pretty good indicator of your risk level, or how likely you’ll be to cause an accident and file a claim.

Insurance companies set higher premiums for high risk drivers because they expect to be paying out for their future claims. So if you had more than one accident within the last six months or filed one too many claims, you may find yourself paying more for your insurance this time around.

However, not all accidents and claims automatically increase your rates. It depends on a number of factors including the severity of the accident, fault, and your driving history.

Why did my car insurer deny my renewal?

High risk drivers are heavily penalized with higher premiums and the possibility of policy non-renewal or cancellation. Every insurance carrier has different grounds for denying renewal, but a few of the major ones include:

Traffic Tickets: Your carrier can deny you renewal if you have acquired a large amount of traffic tickets or moving violations during the time of your policy.

Even though your insurer can look back three to five years on your driving record, they usually don’t deny renewal unless they notice a pattern.

A large amount of tickets within the past year or so would be a red flag.

Many At-Fault Accidents

Serious Violations such as DUIs or DWIs

Filing too many claims despite fault and severity makes you a risky customer for insurers.

Carriers keep track of your claims history and too many shows you’d be an expensive driver to cover.

Every insurer has a different approach to handling late premium payments. And while most won’t cancel your policy after one or two days, they will threaten to cancel if your payment isn’t received by a certain date.

Carriers can also decide to cancel your policy if you have a history of late payments. Either way, once your policy has been cancelled, don’t expect them to reinstate your policy simply because you paid your premium.

At this point you’ll be given a denial of renewal and you’ll have to find a new insurance company. Be aware that you will have higher premiums with your next company because you’re considered high risk now.

Whether your current insurance provider has just sent you a renewal declaration or denial, the end of your policy period is the right time to shop around for other car insurance premiums to ensure you’re getting the most coverage and discounts.